WHEN ARE TAXES TOO MUCH?

Dear
Friends, Family & Subscribers:

There is nothing unpatriotic about trying to
reduce your taxes. The government taxes your
income when you earn it, taxes your money when
you spend it, taxes your money on the interest
or dividends you earn when you save it, and
then when you die, it taxes what's left over.
Talk about an efficient system of separating
you from your wealth, this is about as thorough
as you can get.

If
you're paying more than your fair share of taxes,
you will never get ahead. What you pay in taxes,
you never recover…it's gone. And if you
are like most people I see, then you are losing
a lot of your money unnecessarily to your Uncle
Sam.

Hidden
Taxes Everywhere:
Think for a moment about the taxes you pay every
day: when you fill your tank with gas, you pay
almost 50% of every gallon in taxes; when you
purchase lunch, there is not only sales tax
on the purchase price, but hidden corporate
taxes in the bread, meat, and the soda you consume;
if you stop and pick up a bottle of wine for
dinner, the duty taxes are approximately 60%
of the sales price; and when you arrive at your
cozy, heated home, you will pay 25 cents or
more for every gallon of heating fuel you use.
You pay local and county sales and property
taxes, state, county and federal income and
services taxes, taxes on the purchase of an
airline ticket to visit your family back home,
and even taxes in the form of fees to obtain
or file public information in your local community.
The list goes on and on, according to recently
complied information by the Oxford Club.

You
get the idea. Taxes in the US have completely
gotten out of control… and all of these
taxes before you even sit down and calculate
your state and federal income taxes due for
last year.

Who Pays
the Taxes?
According to the IRS, the top 1% of all income
earners pay 36% of all personal income taxes;
the top 5% pay 55% of all taxes; the top 10%
pay 66%; and the top 25% pay 83% of all income
taxes. Sound a bit lopsided and unfair to you?

To
qualify in the elite group as a top income earner
is much easier than you might think. According
to the IRS numbers, all you needed to earn to
be among the top 25% of all tax filers is to
earn a whooping $52,965. In other words, the
average Joes and Janes are the so-called "wealthy"
individuals, while the sage of Hyannisport,
Senator Ted Kennedy, continues to propose yet
another tax increase to "tax the rich".

Are your
Tax Dollars Well Spent?
Is your tax money being used wisely by our bureaucratics?
You be the judge: In 2000 $8.5 million in food
stamps were paid to 26,000 recipients, all of
which were dead; and during the same year more
than $100 billion (yes billion, not million)
was erroneously sent to Medicare recipients.
Incompetence and apathy in spending your hard
earned money permeates government bureaucracy.
You might just as well flush your cash down
the toilet.

How to
Calculate Your Taxes
In 1913, the first year the tax code took effect,
there were just 170 pages of laws and regulations.
Today, it has grown to over 17,000 pages of
confusing, intermingled, and crossed-referenced
burdensome regulations. To interpret the tax
code you will need to look at the hundred of
thousands of pages of IRS Rulings, Revenue Procedures,
Opinion Letters, Information Letters, Technical
Advice Memorandums, Private Letter Rulings,
Chief Counsel Orders and Notices, and General
Counsel Memoranda.

During
the 1980s the tax code was altered more than
100 times. The Tax reform Act of 1986 brought
amendments to more than 2,000 sections of the
IRS Code and created more than 100 new forms,
with thousands of pages from hundreds of booklets
to interpret the changes. Major tax changes
again occurred in 1990 and 1993.

To
make matters even worse, the so-called "Tax
Simplification" program enacted in 2001
consisted of 441 tax code changes. The on-again,
off-again, on-again estate taxes are an estate
planner's worst nightmare in trying to guess
what year a client might die to minimize estate
tax burdens.

And
do you think you can get help from the IRS on
interpreting the laws? The IRS telephone taxpayer
assistance program fielded approximately 8.5
million wrong answers last year to the most
basic inquiries. Approximately $4 billion in
assessment notices were sent out to 10 million
Americans last year, with approximately 50%
of those incorrect. During an audit of the General
Accounting Office of the IRS in recent years,
there was widespread evidence discovered of
financial malfeasance and gross negligence,
and the IRS could not account for 64 percent
of its Congressional appropriation.

So,
what can you do about trying to reduce your
taxes and pay no more than your fair share?

Looking
for the Advantage
Using qualified tax planners, in advance of
year-end tax filing, is essential. If you wait
until tax time to count the beans from last
year, you have done little to protect your money.
Start at the beginning of each year to work
with a good planner, someone that is forward
thinking, and plan ahead for what steps you
can take for the upcoming tax year. Start planning
today for next tax year filings.

Importantly,
use tax strategies to eliminate taxes on interest,
dividends and capital gains in your investment
portfolio. Think tax deferral. While traditional
Pension Plans, 401Ks, IRAs, and 529 Educational
Plans are all great starters, use more sophisticated
planning techniques that work best for your
particular situation. For example, inquire how
"like-kind" exchanges under Section
1031 and 1035 might benefit you when selling
real estate or exchanging stocks. And, find
out how private annuities and charitable gifting
might have tremendous tax saving benefits. The
list of tax saving opportunities go on and on,
if you learn how to use them.

And
too, think global and diversify your assets
using an offshore trust. This is also an excellent
vehicle to help protect and preserve your assets
from the litigious society that we live in today
where everything you worked hard to achieve
can be lost overnight. Using an offshore trust
and legal tax planning strategies can offer
the best of all worlds.

There
are opportunities for legally avoiding taxes
and asset protection planning. Seeking qualified
counsel to achieve the results that work best
for you is critical.

Remember,
making money is only half the battle; the other
half of the battle is keeping it!

(c) 2010 David A Tanzer & Associates PC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This article may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise including on the world wide web) , in whole or in part, is strictly prohibited without the express written permission of David A Tanzer & Associates, PC.